A Review of developments in

The Global & Indian Steel Industry

Monthly Special edition

Issue No. 34

December 2018 (covering Jan-Dec 2018)

Compiled on behalf of Indian Steel Association,

By Mr. Anup Kashyap,

Senior Executive-Technical

Strictly for Internal circulation

About the Report

❑ The Indian Steel Association introduced a monthly report titled ‘A REVIEW

OF DEVELOPMENTS IN GLOBAL & INDIAN STEEL INDUSTRY’, from August

2016.

❑ The report provides general background information reviewing the status

of the developments in the global and Indian steel industry, pertaining to

raw material, production & consumption, trade, shipping, pricing &

forecasts, country reportage, policy developments, economic parameters

etc.

❑ The consistent format of the report provides an insight into the relevant

aspects of steel scenario globally and domestically .

❑ The information has been sourced from independent third party databases,

knowledge sources and news reports, and the authenticity of the same has

not been independently verified by ISA.

❑ The report is issued in the last week of each month to the members of

Indian Steel Association , various ministries / departments / institutions.

Contents of the Report

SI.

No

Title Page

Number

1. Global Economic Development 4-8

2. Global Steel Development 9-15

3. Domestic Steel Development 16-22

4. Indian Economic Development 23-25

5. About ISA 26-31

GLOBAL ECONOMIC DEVELOPMENTS

4

Source: Global Forecasting Service,

Country-wise Growth Forecasts

2019 - 2023

As of December 12th,2018

The assumptions for forecasts are available on the website of the Economist Intelligence Unit

In % 2019 2020 2021 2022 2023

India

Real GDP Growth 7.7 7.5 7.6 7.7 7.3

Inflation 4.7 4.3 4.5 4.7 4.6

China

Real GDP Growth 6.3 6.1 5.6 5.3 5.0

Inflation 2.8 2.5 2.6 2.8 2.7

U.S.A

Real GDP Growth 2.3 1.3 1.7 2.0 1.9

Inflation 2.4 1.6 1.8 1.7 1.8

Japan

Real GDP Growth 1.4 0.5 1.2 1.0 1.0

Inflation 1.9 2.3 1.3 1.2 1.4

EU 28

Real GDP Growth 1.8 1.7 1.8 1.8 1.7

Inflation 1.9 1.8 1.9 2.0 1.9

5

Source: International Monetary Fund, (e)-estimated,(p)-projected

Global Economic Scenario in 2019

➢ Recently, the International Monetary Fund (IMF) mentioned that global expansion is

weakening and at a rate that is somewhat faster than expected.

➢ The IMF projects that the U.S. GDP will decline slightly by 0.2% in 2019.

➢ China's economy grew 6.6% in 2018, the lowest since 2009 amid trade war. China

accounted for more than 36% of global GDP growth in 2016.

➢ Financial markets in advanced economies appeared to be decoupled from trade

tensions for much of 2018; the two have become intertwined more recently,

tightening financial conditions and escalating the risks to global growth.

2.9

6.6

1.8

7.3

0.9

2.5

6.2

1.6

7.5

1.11.8

6.2

1.7

7.7

0.5

0

2

4

6

8

10

USA China Euro Area India Japan

Percentage Change in GDP in % 2018(e) 2019(p) 2020(p)

6

Source: A report by US Administration Department

Highlights of Trade war in 2018

➢ On March 8, 2018, the President Donald Trump issued Proclamations 9704 and 9705 on Adjusting Imports of

Steel and Aluminium into the United States, under Section 232 of the Trade Expansion Act of 1962, as

amended (19 U.S.C. 1862), providing for additional import duties for steel mill and aluminium articles,

effective March 23, 2018.

➢ Eight countries filed formal complaints with the World Trade Organization. Five of them - Canada, India, and

Mexico, the European Union, Norway, and Switzerland - pointed out that they were allies. The other two

complainants were China and Russia.

➢ America is the world's largest steel importer (34.6 Mt in 2017). Imports have captured an increasing share of

demand, as shown by the relatively high levels of import penetration in 2015, 2016, and 2017 at 33.8, 30.1,

and 32.6 percent, respectively

➢ On March 26, 2018, Trump exempted South Korea from the steel tariff. The U.S. ally is the third largest

foreign supplier of steel. In return, South Korea agreed to amend the 2012 bilateral trade agreement.

➢ On August 2, 2018, the administration announced a 25 percent tariff on $16 billion worth of Chinese goods. It

went into effect on August 23. It applied to industrial equipment like tractors, plastic tubes, and chemicals. In

response, China announced a 25 percent tariff on $16 billion worth of U.S. goods, including autos and coal. It

went into effect the same day.

➢ On August 10, 2018, Trump announced he would double the tariffs on aluminium and steel imports from

Turkey.

➢ On January 18, 2019, China announced it would increase its purchases of U.S.-made exports and reduce the

trade deficit.

7

Source: The Bloomberg

Top 10 Innovative countries in 2019

2018 2019 Country Total Score

1 1 South Korea 87.38

4 2 Germany 87.30

7 3 Finland 85.57

5 4 Switzerland 85.49

10 5 Israel 84.78

3 6 Singapore 84.49

2 7 Sweden 84.15

11 8 USA 83.21

6 9 Japan 81.96

9 10 France 81.67

➢ The Bloomberg Innovation Index ranks the world’s 10 most innovative countries using seven

criteria including research and development expenditure as a percentage of GDP, productivity,

patent activity, concentration of researchers, including postgraduate PhD students, engaged in R&D

per 1 million people, and concentration of high-tech companies.

Top Countries with Innovation Index 2019 by the Bloomberg

➢ India is in 54th Position in Innovation Index by the Bloomberg for the year 2019.

8

GLOBAL STEEL DEVELOPMENTS

9

Source: World Steel Association

Global Steel Outlook in 2018

➢ Global crude steel production reached 1,808.6 million tonnes (Mt) for the year 2018,

up by 4.6% compared to 2017. Crude steel production increased in all regions in 2018

except in the EU, which saw a 0.3% contraction.

➢ Asia produced 1,271.1 Mt of crude steel in 2018, an increase of 5.6% compared to

2017. China’s crude steel production in 2018 reached 928.3 Mt, up by 6.6% on 2017.

China’s share of global crude steel production increased from 50.3% in 2017 to 51.3%

in 2018. India’s crude steel production for 2018 was 106.5 Mt, up by 4.9% on 2017,

meaning India has replaced Japan as the world’s second largest steel producing

country. Japan produced 104.3 Mt in 2018, down 0.3% compared to 2017. South Korea

produced 72.5 Mt of crude steel in 2018, an increase of 2.0% compared to 2017.

➢ The EU produced 168.1 Mt of crude steel in 2018, a decrease of 0.3% compared to

2017. Germany* produced 42.4 Mt of crude steel in 2018, a decrease of 2.0% on 2017.

Italy produced 24.5 Mt in 2018, up by 1.7% on 2017. France produced 15.4 Mt of crude

steel, a decrease of 0.7% on 2017. Spain produced 14.3 Mt of crude steel in 2018, a

decrease of 0.1% on 2017.

➢ Crude steel production in North America was 120.5 Mt in 2018, 4.1% higher than in

2017.The US produced 86.7 Mt of crude steel, up by 6.2% on 2017.

10

Source: World Steel Association

➢ Total Crude steel production for the year 2018 was 1808 MT.

➢ The region wise crude steel production is provided in chart below.

RegionJan –Dec 2018 in

(MT)

Jan- Dec 2017 in

(MT)

% Change

EU-28 311.8 311.7 0.0

CIS 101.3 100.9 0.3

N. America 120.5 115.8 4.1

S. America 44.3 43.7 1.3

Africa 16.1 15.1 7.2

Middle East 38.5 34.5 11.7

Asia 1271.1 1203.2 5.6

Oceania 6.3 6.0 5.9

World 1808.6 1729.8 4.6

Region wise Crude Steel Production-2018

➢ Year on Year this reflects an increase of crude steel production over 2017 of 4.6%.

11

Source: World Steel Association

Top 10 Crude Steel Producing Nation

2018

Rank Nation 2018

(in MT)

1 China 928.3

2 India 106.5

3 Japan 104.3

4 United States 86.7

5 South Korea 72.5

6 Russia 71.7

7 Germany 42.4

8 Turkey 37.3

9 Brazil 34.7

10 Iran 25

• Table lists world’s top ten nations with regards to total crude steel output in 2018.

12

Source: Steel Mint

China Steel Scenario - CY 17 Vs CY 18

Particulars 2018 2017 Y-o-Y (%)

Production (in MT)

Crude Steel

Iron Ore

928.3 831.7 12%

787.63 1321.6 -40%

Imports (in MT)

Coal

Iron Ore

Ferrous Scrap

67 69.4 -3%

1060.7 1075 -1%

1.31 2.32 -44%

Export (in MT)

Steel

Ferrous Scrap

69.72 75.41 -8%

0.34 2.23 -85%

13

Source: Steel Mint Research

Quantity in Million Tonnes

➢ As per latest custom data ,South Korea flat steel export which includes 7208 (HR coils/Plates), 7209

(CR coils),7225 Electrical sheets,7210/7212 (GP/GC) registered a marginal decline of 3% in CY 18 to

21.47 MT compared to 22.17 MT in CY 17.

➢ China remained the largest importer in 2018 from South Korea and accounted about 16% (3.41 MT )

of share in CY 18. Japan stood at 13% ( 3 Mt) and India accounted 11 % (2.43 MT) respectively.

➢ HRC/Plates accounted highest import category among flat steel with 7.93 Mt in 2018.

South Korean Flat Steel Export

2018

14

Source: IIHS market info

Hot rolled coil Steel Price in $ per tonnes Steel Rebar in $ per tonnes

Trend in Global Steel Price

➢ During the last months of 2018, US Steel prices (HRC) were at the peak around $ 1100 per tonne

which has fallen to around $ 810 per tonne in the early days of 2019. The reason for high prices was

theTariff imposition by USA on different countries.

➢ Chinese Price of the HRC on the other hand was around $ 450-500 per tonnes due to the low raw

material prices (Mainly Iron Ore and Coking Coal).There has been excessive production of Steel by

China in spite of closure Induction furnaces.

15

DOMESTIC STEEL DEVELOPMENTS

16

Source: JPC DO Report 2018

Indian Steel Scenario

April- December 2018

Items

Indian Steel Scene(Million Tons)

April-Dec 2018

(Prov.)

April-Dec 2017

(Final)

% Change

(Prov.)

Crude Steel

Production78.94 75.72 4.3

Hot Metal Production53.70 50.30 6.8

Pig Iron Production4.47 4.22 5.9

Total Finished Steel ( Alloy+ Non Alloy)

Production 97.35 93.17 4.5

Import 5.908 6.096 -3.1

Export 4.675 7.603 -38.5

Consumption 71.86 66.30 8.4

17

Source: Steel Mint Research

India Finish Long Steel Exports-2018

➢ India-World’s 2nd largest steel producer has reported increase in its monthly Finished long steel exports

in Nov’ 18.

➢As per custom data, the nation has exported about 49,111 metric tonnes Finished long Steel in Nov’18,

up by 4.32 % against 47,074 metric tonnes in Oct’18.

➢Further in comparison with Jan-Nov period the exports declined sharply by 37.7 % Y-o-y and recorded at

415,873 Metric tonne in 2018 as compared with 668,292 metric tonne in 2017(Jan-Nov 2018).

Indian Finished Long Steel Exports

18

Source: Steel Mint Research

Trend In Domestic Steel Prices

Jan-Dec. 2018

HRC Specification:2.5-8MM ,IS 2062

CRC Specification:0.90MM,IS 513G0

4250044500 45500 45000

46500 46300 4570042250

46500 47500 46800

42500 41900

47000 4850049500 50000

52500 53000 51000 51500 52750 54000 53500

4900048000

10000

30000

50000

70000

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19

HRC Price Rs. Per tonnes

CRC price Rs. Per tonnes

➢ The Average HRC price for Delhi of Specification of 2.5-8 MM, IS 2062 grade for the was around Rs. 44,000 per tonne from

January 2018 to January 2019(Figures till January 7,2019).

➢ The Prices in January 2019(till January 7th ,2019) for HRC was Rs.41,900 per tonne.

➢ The Average CRC price for Delhi of Specification of 0.90 MM,IS 513 G0 grade was around Rs. 50,788 per tonne from January

2018 to January 2019(Figures till January 7,2019).

➢ The Prices in January 2019 (till January 7th ,2019) for CRC was Rs.48,000 per tonne.

19

Source: Steel Mint Research, One tonne of crude steel production requires about 1.6 times of Iron Ore

Trend In Domestic Iron ore prices

Jan-Dec. 2018

➢ The domestic Iron Ore Price saw a rise of 2 % from Jan-2018 to Dec 2018 i.e from Rs

5800 Per metric tonnes to Rs. 5900 per metric tonnes .

➢ The prices touched the highest point in October and November 2018 i.e Rs. 6600 per

tonnes.

➢ Naturally this affected the domestic prices of finished steel during the month of October

and November 2018.

5800 58005800

56005600

5800

61006100

6400

6600 6600

5900

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

IRON ORE PRICE RS. PER TONNEDomestic Iron Ore(Fe-62%) Price-Rs. Per tonnes

Inclusive of Royalty , DMF, NMET and GST @5%

DMF-District Mineral Foundation

NMET-National Mineral Exploration Trust

20

Source: Steel Mint Research, One tonne of crude steel production requires 0.8 tonne of coking coal

Trend In Coking Coal prices

Jan-Dec. 2018

274

236

246

211

202

211

213

199

204

237 237

233

50

100

150

200

250

300

Coking Coal Price-$ per tonne

CNF India, Premium HCC Australia

➢ Coking coal Import prices saws a significant increase during the month of October and

November 2018 touching around 237 $ per tonnes. These prices were exclusive of GST

@ 5%,Import Duty of 2.5 % and Social Welfare Charge of 10 %.

➢ Since Coking coal is generally Imported from different parts of the world ,its had a

direct repercussion on Domestic steel prices in the country.

21

Source: Steel Mint Research,

Trend In Met-Coal prices

Jan-Dec. 2018

➢ The Average Met Coke price for east India was around Rs.26,000 per tonne.

➢ The Prices were at peak during November 2018 which was Rs. 29,500 per tonne.

2500025000

25000

26500

25500

26000 26000

26500

27000

2900029500

29000

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

Indian Met Coke (Rs / tonne plus GST 5%)

Ex-India(East)-Price

Size-25-90 mm

22

INDIAN ECONOMIC DEVELOPMENT

23

Source: World bank

➢ The Central Statistics Office has

forecast India’s GDP will rise to

Rs. 188.4 Lakh crore and per

capita GDP to Rs.1,41,447 in the

current fiscal year. India will

cross two important statistical

milestones if these numbers are

achieved.

➢ India should also Overtake UK in

coming years to become fifth

largest Economy of the world

➢ At an average exchange rate of

Rs.70 per dollar for FY 19,India’s

per capita GDP should cross $

2000.

➢ India’s per capita GDP is still on

lower side as compare to the

world average.

10,714

1940

59,531

39,720

8,827

9,821

World

India

USA

UK

China

Brazil

per capita GDP in 2017 ($)

Indian Economic Forecast

$ 20 Trillion

$ 12 Trillion

$ 5 Trillion $ 2.5 Trillion

$ 3.6 Trillion

24

Source: Reserve Bank of India

CurrencyDate

25th Jan,2019

I USD 71.10

1 EUR 80.49

1 GBP 90.23

100 YEN 64.74

Base Rate : 8.95-9.45 %

Savings Deposit Rate : 3.50-4.00 %

MCLR (Overnight) : 8.15-8.55 %

Term Deposit Rate > 1 year : 6.25-7.50 %

Policy Repo Rate : 6.50 %

Reverse Repo Rate : 6.25 %

Marginal Standing Facility Rate : 6.75 %

Bank Rate : 6.75 %

CRR : 4 %

SLR : 19.25 %

Reference Rates

Lending/ Deposit Rates

Reserve RatiosPolicy Rates

Rates at Reserve Bank of India

2019

25

ABOUT ISA

26

About ISA

➢ The Indian Steel Association (ISA) is the voice of the Indian Steel Industry,

in both domestic and global forums. It is at the forefront of all

deliberations pertaining to matters of public & regulatory policy, raw

materials, international trade, logistics, environmental concerns,

technology and other aspects of steel-making. The Indian Steel Industry

looks at ISA to further its critical agenda of sustained growth, both in

steel production and in generating domestic demand.

➢ ISA was formed in 2014 and has 15 members – eight full members and

seven affiliates. The list of full members includes –Steel Authority of India

(SAIL) and Rashtriya Ispat Nigam Ltd (RINL) – while heavyweights from

the private sector include JSW Steel Ltd, Tata Steel Ltd, Jindal Steel and

Power Ltd, Essar Steel India Ltd, Bhushan Power and Steel Ltd and Tata

Steel BSL Ltd. ISA, an affiliate member of World Steel Association (WSA),

regularly collaborates with WSA on the organisation of events, as well as

taking part in other key meetings with global partners.

27

Our eight Full Members are:

• Tata Steel Ltd

• Steel Authority of India Ltd.

• JSW Steel Ltd.

• Rashtriya Ispat Nigam Ltd.

• Essar Steel Ltd.

• Jindal Steel & Power Ltd.

• Tata Steel BSL Ltd.

• Bhushan Power & Steel Ltd.

Our Seven Affiliate Members are Monnet

Ispat & Energy Ltd., INSDAG (Institute

for Steel Development and Growth),

KISMA (Karnataka Iron and Steel

Manufacturer’s Association), Arjas Steel,

Visa Steel, Electrosteel Steels and Orissa

Metalliks Pvt. Ltd

Members of Indian Steel Association

28

Vision and Objectives of ISA

➢Vision of ISA-

To work towards transforming the Indian Steel Industry as a

global leader acclaimed for its Quality, Productivity and

Competitiveness, with a focus on health, safety and

environment, along with a growing thrust on innovation through

R&D, adopting an inclusive and collective approach.

➢ Objectives of ISA-

▪ Promoting steel by raising awareness about the numerous

advantages of good quality steel

▪ Collaborating with international steel organizations to

tackle issues of mutual interest.

▪Working with the government on matters affecting the

steel industry.

29

Important Ministries/Department/Organization

Ministry of Steel

Name of the person Designation Contact Details

Shri Binoy Kumar Secretary secy-steel@nic.in

Shri Saraswati Prasad Special Secretary & Financial Adviser asfasteel@nic.in

Smt. Rasika Chaube Additional Secretary rasikachaube@nic.in

Smt. Ruchika Chaudhry Govil Joint Secretary ruchika.govil@nic.in

Shri Puneet kansal Joint Secretary js1-steel@gov.in

Ministry of Mines

Name of the person Designation Contact Details

Shri Anil Gopishankar Mukim Secretary secy-mines@nic.in

Dr. K. Rajeswara Rao Additional secretary as_mines@nic.in

Ministry of Commerce

Name of the person Designation Contact Details

Shri Anup Wadhawan Secretary csoffice@nic.in

Shri Shudhanshu Pandey Additional Secretary astpd-doc@nic.in

Shri Alok Vardhan Chaturvedi DGFT dgft@nic.in

Dr. K.C.Rout Additional Secretary-DGFT kcrout@nic.in

Ministry of Environment, Forest and Climate Change

Name of the person Designation Contact Details

Shri C K Mishra Secretary secy-moef@nic.in

Control Pollution Central Board

Name of the person Designation Contact Details

Shri S.P. Singh Parihar Chairman ccb.cpcb@nic.in

Dr. Prashant Gargava Member Secretary mscb.cpcb@nic.in

Ministry of FinanceName of the person Designation Contact Details

Shri Rajiv Kumar Joint Secretary rajeevkumar@nic.in

30

Contact Us for data related issues

Address:207-208, 2nd Floor

Kailash Building

New Delhi -110-001

India

Tel: +011 4266 8811

Fax: +011 4266 8805

E-mail: a.kashyap@indsteel.org

Website:http://indsteel.org/31

THANK YOU

DISCLAIMER

The material in this presentation has been prepared by Indian Steel Association (ISA) and is a general background information reviewing the

status of the developments in the global and Indian steel industry as at the date of this presentation. This presentation is strictly for internal use

of all the member companies of ISA, whose names have been stated in the presentation.

Information is given in summary form and does not purport to be complete or all inclusive. The information has been sourced from independent

third party databases, knowledge sources and news reports, and the authenticity of the same has not been independently verified by ISA.

Additionally, any third party forecasts on financial or economic parameters, projections or estimates should not be construed as an investment

advice or a recommendation to any ISA member. Recipients of this presentation from member companies of the ISA should each make their own

evaluation of the contents and adequacy of the information contained in the presentation.

ISA does not undertake any obligation to publicly release any changes to any revisions, modifications or forward looking statements in the

subsequent editions of this bi-monthly presentation. Unless otherwise specified, all information is for the period December 2018 or prior.

32